Heavy agenda awaits Canada's next finance minister

A heavy agenda awaits Canada’s new Liberal finance minister after he or she is sworn in Nov. 4, with major changes to Canada’s tax system, billions in new infrastructure spending and the need to manage a dip back into deficits.

Deciding who will be the country’s next minister of finance is one of the most important decisions facing Prime Minister-designate Justin Trudeau.

The incoming prime minister has promised his government’s first piece of legislation once Parliament resumes will be a middle-class tax cut. To help pay for the promise, the party will increase taxes on the richest Canadians.

Another key piece of Trudeau’s fiscal and economic platform is to post $25 billion worth of deficits over three years to kick the economy into a higher gear, with a razor-thin surplus in 2019-20 but no contingency fund to act as a financial shock absorber.

“On balance, as an economist, I look at the platform and I think it signals a shift from austerity towards stimulus,” said Craig Alexander, vice-president, economic analysis with the C.D. Howe Institute. He cautioned, though, “it’s not going to create a huge boost to economic activity” in a $2-trillion Canadian economy.

The Liberals are promising to almost double federal infrastructure spending to nearly $125 billion – from $65 billion – over 10 years.

Billions of dollars in new spending will also go out the door on the government’s Canada Child Benefit, which will have a huge impact on federal finances.

Alexander said Trudeau’s new government should take the time to ensure it properly rolls out the infrastructure spending.

The federal government’s response to the 2008 economic crisis included tens of billions of dollars in stimulus spending on “shovel ready” projects that got the funding out the door quickly, but that didn’t always mean the most important projects got the dollars.

So who could Trudeau choose?

Ralph Goodale

If Trudeau is searching for experience and a steady hand on the economic levers, his best bet might be Goodale, who held the position in Paul Martin’s government from December 2003 to February 2006.

Goodale, a Saskatchewan MP with more than 25 years’ experience in Parliament, has attended major economic meetings in the past, such as the G7 and G20 meetings of finance ministers. He would be a good sidekick for the new prime minister at international summits.

Trudeau’s first international meeting may be the G20 leaders’ summit in Turkey on Nov. 15-16, which will be immediately followed by the APEC economic leaders’ meeting in the Philippines.

Downside? Goodale is an old face and Trudeau may be trying for a new look in this key post.

Chrystia Freeland

Freeland is a Toronto MP first elected in a November 2013 byelection who is Harvard-educated, a Rhodes Scholar, an author and a longtime financial journalist. She is co-chair of the Liberal party’s economic advisory council and served as international trade critic in Parliament prior to the election.

She’s also a woman, and Trudeau has pledged that half of the members of his cabinet will be female.

Bill Morneau

Also likely to get strong consideration is new Toronto Centre Liberal MP Morneau, the former chair of the C.D. Howe Institute, an economic think-tank, and member of Trudeau’s economic advisory council. Morneau is executive chairman of Morneau Shepell, the largest Canadian human resources services organization, and served as an adviser to the Ontario government on pension investments and retirement income.

Scott Brison

Another strong candidate for the job is Scott Brison, the Liberal finance critic prior to the election, who served in Paul Martin’s cabinet as Public Works and Government Services minister. Brison is a former investment banker with significant political and financial expertise that would suit the role. Along with Freeland, he is co-chair of the Liberal party’s economic advisory council.

John McCallum

Don’t count out McCallum, the former chief economist of the Royal Bank of Canada and minister in both the Chrétien and Martin governments. An MP for a Toronto-area riding, McCallum also has previously served as parliamentary secretary to the Minister of Finance.

“Justin Trudeau is blessed with quite a lot of bench strength in terms of people to pick from for key cabinet positions,” Alexander said.

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